Small Business

From Garbage to Gold

Slide Show >>Two years ago, Eli Reich was a mechanical engineer consultant for a Seattle wind energy company when his messenger bag was stolen. The environmentally conscious Reich, who rode his bike to work every day, decided that instead of buying a new one, he would simply fashion another bag out of used bicycle-tire inner tubes that were lying around his house.

Soon compliments on his sturdy black handmade messenger bag turned into requests. "That was the catalyst," says Reich, who obtained a business license, gave up his day job, and quickly launched Alchemy Goods in the basement of his apartment building. The company's motto: "Turning useless into useful."

For a slew of new entrepreneurs, garbage is not just a matter of personal opinion, it is, ahem, their business. In other words, they're creating new companies out of other people's junk.

WORKING SOLO. While innovation has always been the entrepreneur's trademark, a growing interest in the green movement is propelling small business owners to create new products and services that also happen to be inventive recycling solutions for the country's vast waste heaps (see BusinessWeek.com, 6/19/06, "Do You Need to Be Green?". "The sustainability and restoring of our environment are providing opportunities in many fields of small business," says John Stayton, co-founder and director of the Green MBA program at San Francisco's New College of California.

Reich's Alchemy Goods grew quickly. At the outset, he worked solo, making about 5 to 10 bags a month. Now there are three employees. "In our first year, we probably made about 125 bags," he says, "since last year we've probably made another 1,000."

Initially marketing consisted of word of mouth, and the products were sold on the company's Web site. Today the bags can be found in retail outlets in Washington, Oregon, Pennsylvania, California, Montana, and two stores in Japan.

SECOND LIFE. And the products, made from materials found at local junkyards and bike shops, have grown, too. Alchemy now offers different styles. The classic messenger bag ($148) and the smaller Haversack bag ($88) are made from recycled inner tubes and seat belts. The Adbag, a $30 tote, is fashioned from old mesh outdoor advertising banners.

Reich says he is looking to broaden his product line and expand his distribution channels. "After we started the company, I didn't see a lot of other recycling [products]," he says. "I've learned quite a bit about companies taking similar innovative approaches to product design. It's a niche now, but it's a growing field. People are becoming more aware of what products are made of and where they go after they are done owning them."

It is estimated that America produces about 380 million tons of waste a year. This also generates a number of harmful gasses and emissions into the atmosphere and maintains the nation's dependence on landfills. Entrepreneurs who have taken to creating businesses based on the trash of others are not only launching new livelihoods but giving a second life to discarded rubbish while helping the environment.

RUBBER RESULTS. In 2001, outraged at seeing 26 trees marked for destruction in her Gardena (Calif.) neighborhood because their growth was damaging area sidewalks, Lindsay Smith, a Hollywood screenwriter, unwittingly became an activist and an entrepreneur, soon launching Rubbersidewalks. "These were healthy, mature trees that were being destroyed because the city couldn't afford to repair the broken sidewalks," she says. "We weren't even given the opportunity to weigh in on the choice."

Smith went into action. "It turns out this was a really big problem," she says. And not just in her neighborhood. According to Rubbersidewalks, 330,000 miles of U.S. sidewalks are damaged annually. Moreover, many municipalities simply cut down the trees because it has become too costly to constantly repair the sidewalks.

After doing some investigating, Smith got a grant from the state of California to do research on using rubber pavers as a substitute for concrete sidewalks. Smith spent two years in R&D, eventually coming up with a product made entirely of recycled rubber tires.

PILING UP. The pre-molded, prefabricated rubber squares are cut to fit and are installed over a layer of crushed granite. Interlocking dowels connect the pavers. For repairs, individual pavers can be unlocked and removed.

Smith's rubber sidewalks created a solution to four problems. First, they reduce the number of tires piling up in dumps—according to the Rubber Manufactures Assn., every year more than 250 million scrap tires are thrown out in the U.S.

Second, using rubber pavers, which are unbreakable, reduces the cost of repairing sidewalks, as well as the number of lawsuits resulting from injuries sustained from people tripping on broken concrete. Rubber sidewalks also help preserve trees, and they don't add to what's called heat-island effect, the increase in urban air and surface temperatures due to pavement, asphalt, and building infrastructures.

According to Smith, Rubbersidewalks have been installed in 60 cities across the country and Canada. She says she's gotten requests from metropolitan centers in Asia, Europe, Australia, and New Zealand as well.

Moreover, Smith says she has heard from senior citizen homes interested in installing rubber sidewalks because they are safer and easier on limbs. "We've had 1,000% growth this year," she says. "We will have more growth next year—it has skyrocketed."

WASTE STREAM. Four years ago, Dan White, a naturalist, decided that he wanted to start a company that helped the environment. He founded Rapid Refill Ink, in Springfield, Ore., which remanufactures and sells inkjet and laser toner cartridges at a 40% to 70% savings to consumers.

"There are 1 billion cartridges in landfills," he says. "We can refill one cartridge over 20 times— that's a huge environmental savings." Today the company has expanded to include 70 stores and an additional 300 franchise contracts nationwide (see BusinessWeek.com, 10/28/05, "Upstarts Spread in the Ink Wars").

In addition to creating an environmentally friendly product, White went even further, making sure the stores themselves were made of repurposed materials. Rapid Refill's walls are made of corn stalks, the marble-looking countertops are made of sunflower seed shells, and the carpets are composed of recycled materials like milk cartons.

"There are so many products generated in our culture," says the Green MBA's Stayton. "Consumers are encouraged to purchase more and more, but what happens to all those products? Without being mindful of the final destination, we are going to end up with a world full of junk. We need companies that are creative and innovative and will take products out of the waste stream and turn them into something new." In doing so, they prove that one man's garbage can be an entrepreneur's goldmine (BusinessWeek.com, 07/20/06, "Green Growth Areas for Entrepreneurs").